What is about to happen to our nation – to the world, will be referred to in the history books as a DEPRESSION. Those in the present will not be so bold – the word recession will be used although everyone will be depressed!
I feel smarter after reading Robert’s posts but sometimes ignorance can be bliss 😦
If you don’t want to read the article scroll to the bottom and watch the cartoon 😉
“People are rational—sometimes—and when the real costs of debt outweigh the psychic` benefits of consumption, they usually seek to reduce debt. Enterprise does so as well when returns on speculation, investment, and production are below the hurdle rate implied by prevailing interest rates. Governments can temporarily exempt themselves, but even they eventually run into reality. As the marginal return on debt goes negative, debt is paid down or written off, liquidity is hoarded, and the velocity of money slows.”
Sixteen trillion dollars is a lot of money. That is approximately the size of the combined balance sheets of the world’s major central banks: the Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan, the Swiss National Bank, and the People’s Bank of China. It is 35 percent of their nations’ GDPs, up from only 14 percent in May 2006, when balance sheets summed to just shy of $6 trillion.
Here’s a larger number: $225 trillion. That’s the estimated global grand total of individuals’, businesses’, and governments’ nominal debt. It is over 14 times as large as major central bank balance sheets; the smaller figure is 6.23 percent of the larger figure. In the good old days when central bank balance sheets were larger relative to total debt, economics students were taught that when a central bank expanded its liabilities (currency and member bank deposits)…
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